Northern Technology Inc. (NTI) closed the end of 2009 with a balance of $1,500,000 in retained eam ings as shown below. Because of a poor economy, NTI cut its total annual dividends to $30,000, he
which it expects earnings and dividends to increase. For the next eight years, it expects the follow
Castell Divident Policy
results
Net Income
(loss)
(5000)
Dividends
(5000)
Retained
Earnings
(5000)
1,500
Yaar
2009
2010
2011
2012
2013
2014
2015
2016
2017
(500)
(200)
400
350
700
810
950
1.150
30
30
45
45
125
150
225
?
Required:
Calculate the maximum dividend NTI could pay at the end of 2017, assuming dividends are paid once annu-
ally at year-end

1. consider a two-firm industry. firm 1 (the incumbent) chooses a level of output qı. firm 2 (the potential entrant) observes qı and then chooses its level of output q2. the demand for the product is p 100 q, where q is the total output sold by the two firms which equals qi +q2. assume that the marginal cost of each firm is zero. a) find the subgame perfect equilibrium levels of qi and q2 keeping in mind that firm 1 chooses qi first and firm 2 observes qi and chooses its q2. find the profits of the two firms-n1 and t2- in the subgame perfect equilibrium. how do these numbers differ from the cournot equilibrium? b) for what level of qi would firm 2 be deterred from entering? would a rational firm 1 have an incentive to choose this level of qi? which entry condition does this market have: blockaded, deterred, or accommodated? now suppose that firm 2 has to incur a fixed cost of entry, f> 0. c) for what values of f will entry be blockaded? d) find out the entry deterring level of q, denoted by q1', a expression for firm l's profit, when entry is deterred, as a function of f. for what values of f would firm 1 use an entry deterring strategy?